The Securities and Exchange Commission (SEC) charges crypto investment adviser Titan for using misleading performance metrics for advertisements. The regulator alleged that Titan attracted clients to its platform using inflated results that offered unrealistic returns on investment without adopting the required policies.
In an announcement on the SEC’s official website, the regulator also revealed that the New York-based firm failed to comply with other guidelines, including disclosure of investors’ crypto assets, using client signatures without their consent, and not enforcing regulations related to crypto asset trading among employees.
Titan Offered Preposterous Returns
According to the SEC, Titan used schemes like performance hikes and ridiculous returns to mislead its clients. The indictment stated that the investment advisory firm said in its mobile app that investors can get up to 2,700% annualized interest using its Titan crypto strategy. The SEC cited that these hypothetical performance projections, not backed by material information, violated its marketing rules, as amended in December 2020.
In the charges focusing on Titan’s activities between August 2021 and October 2022, the top US regulator also stated that Titan didn’t correctly inform its users about their asset custody. The SEC also accused Titan of failing to ensure that its employees complied with existing personal trading regulations.
“When offering and marketing complex strategies, investment advisors must ensure the accuracy of disclosures made to existing and prospective investors,” Osman Nawaz, the Chief of Enforcement’s Complex Financial Instruments Unit, stated. “Titan’s advertisements and disclosures painted a misleading picture of certain of its strategies for investors. This action serves as a warning for all advisers to ensure compliance,” he added.
The SEC noted that Titan complied with the investigation. Titan also signed a cease-and-desist order with the SEC without admitting or denying the charges. The startup will now pay $192,454 in disgorgement, prejudgment interest, and an $850,000 civil penalty fee, which the commission will give to affected clients.
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